Conference to focus on potential for seed capital investing

OKLAHOMA CITY - The potential for seed capital investing has never been stronger, even in the current down economy, said Steve Mercil, vice chairman of the National Association of Seed and Venture Funds.

"There's lots of deals out there, but constrained in terms of the capital they can attract," Mercil said. "So there's a big opportunity for equity-type investing. . . . There's more to pick from; the pricing is better.

"What everyone has had to adjust to, from the capital side of business, is how they look at deals and which they can put money into and expect growth, given all the other economic constraints. So I think it's changed how you look at valuing certain companies and looking at how you're going to exit. . . . But the demand and quality of the deals is much better than we've seen in the past."

That will be the general thrust of the upcoming NASVF annual conference Sept. 14-16 in downtown Oklahoma City, he said. About 15 panels will be hosted by the likes of Mercil, who also is chief executive of RAIN Source Capital, on seed investing at the forefront of economic recovery.

U.S. Agriculture Secretary Tom Vilsack is scheduled to speak at the event. NASVF Chief Executive James Jaffe said Vilsack will discuss how heavily the department is involved in developing technology transfer, "which will have some appeal to people in Oklahoma who have money they want to invest in agricultural technologies, and also some of the universities here."

The nonprofit organization's members include economic development organizations, seed money investors, venture fund managers and university executives. Mercil said NASVF "has always had a commitment to getting people into areas like Oklahoma City, one of our fastest-growing metro areas with some interesting, unique things going for it in terms of public-private partnerships in economic development."

"Oklahoma is often called a 'fly-over state,' as is Minnesota, where I come from," Mercil said. "So this is an opportunity for a lot of people to come to a region and see there's a lot of interesting things going on, a lot of creativity and innovation."

Jaffe said most small start-ups enter the market with the bare support of three Fs: "friends, family and fools." If they've got a good business plan, they'll secure additional capital through angel investors and state incubator funds.

But then they face what Jaffe and others refer to as the Valley of Death, a gap between those initial rounds and Series A financing, and the inability to transition from negative cash flow to self-sustainable growth. That's where NASVF and other seed capital investors step in, usually in the range of $500,000 to $1.5 million.

"From the capital provider's side, this conference will provide discussions about what strategies people are exploring within this (economic) climate to make these investments," Mercil said. "People are changing how they're doing that, but the opportunities are significant and better."